• Source:JND
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Petroleum products will continue to remain outside the Goods and Services Tax (GST) regime even in the revamped indirect tax structure after the Central government proposed to scrap two GST tax slabs of 12 per cent and 28 per cent, leaving only two slabs of 5 and 18 per cent, news agency PTI reported on Friday quoting sources. 

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Revamped Indirect Tax Set-Up Structure

-99 per cent of items in current 12 pc GST tax slab to move to 5 per cent bracket in revamped GST regime, the agency reported quoting government sources.

-About 90 per cent of taxable items in 28 per cent bracket to shift to 18 per cent slab in revamped GST regime, as per the proposal.

-Govt expects GST revamp to give consumption a big boost, which will offset revenue loss due to rate rationalisation

-GST of 40 per cent to be levied on tobacco products in revamped regime; total incidence of taxation to remain at current level of 88 per cent.

-Common man items, daily-use products to be taxed at 5 per cent in revamped GST regime,  as per the proposal.

-A special 40 per cent rate will be levied on luxurious and sin products,  according to the proposal.

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The finance ministry on Friday said that the government looks to unveil "next generation" GST reforms in the current financial year which will lower tax burden on daily use items.

Currently, GST is a four-tier tax structure of 5, 12, 18 and 28 per cent, where essential items are either exempted or taxed at the lower tax bracket, while demerit and luxury items at the highest slab. Besides, a compensation cess is levied at varied rates on demerit and luxury items like pan masala and cars.

The GST Council, chaired by Finance minister Nirmala Sitharaman and comprising state ministers, is expected to meet in September to discuss the GoM proposal on rate rationalisation.

"The GST Council in its next meeting will deliberate on the recommendations of GoM, and every effort will be made to facilitate early implementation so that the intended benefits are substantially realised within the current financial year," the finance ministry said while unveiling its proposal which has been submitted to the rate rationalisation GoM.

Prime Minister Narendra Modi in his address to the nation on 79th Independence Day announced that 'next generation' GST reforms which will lower tax burden substantially and benefit small industries is in the works and the lower taxes will be a Diwali gift to citizens.